How to use this calculator
- Enter or choose customer lifetime value (gross profit).
- Enter or choose customer acquisition cost.
- Enter or choose gross profit per customer per month.
- The lTV:CAC ratio updates as you type. Use Copy result or Share to keep it.
Method
LTV:CAC = LTV ÷ CAC; Net value = LTV − CAC; Payback (months) = CAC ÷ Monthly gross profit per customer
- LTV
- lifetime gross profit per customer
- CAC
- total acquisition cost ÷ new customers
- Monthly gross profit
- revenue per customer per month × gross margin
Worked example
- LTV:CAC = 900 ÷ 300 = 3×.
- Net value = 900 − 300 = $600.
- Payback = 300 ÷ 25 = 12 months.
Each customer returns 3× their $300 acquisition cost, and the cost is recovered after 12 months.
What the result means
Below 1, every new customer loses money. Many investors quote about 3 as a healthy rule of thumb, but the right level depends on your overheads, cash position and how reliable the lifetime estimate is. Payback tells you how long cash is tied up per customer.
Assumptions and limits
- LTV is measured in gross profit, not revenue.
- Payback assumes the same gross profit every month.
- The ratio is only as good as the lifetime estimate, which is often the weakest number.
Questions
What if my LTV is based on revenue?
Multiply it by your gross margin first. A revenue-based ratio overstates unit economics.
Why does payback matter if the ratio is good?
A long payback ties up cash. A 5× ratio that takes 40 months to recover CAC can still strain a growing business.